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Todd Harrison: Random Thoughts into May


A shift in perspective goes a mighty long way

It's been two full months since I wrote the farewell missive befitting the Minyanville editorial brand.

I wasn't sure when -- or if -- I would write again.

After fifteen years of sharing real-time vibes all day, every day, and staring at screens for a full quarter-century, I was thrilled to unplug from the matrix, if only for a while.

To say I was incredibly spent would be an understatement. My self-imposed stress manifested into some pretty serious health issues, which are now in the past in large part due to this recent refocus.

The time has been used wisely.  I got healthy, shedding 45 pounds, spent quality time with my children -- experiences that will never be replicated -- and otherwise took a deep breath to refresh my priorities. Throughout it all, I've been grateful for and mindful of the many things I once took for granted; time is indeed the most precious commodity.

If you're looking for prescriptive financial advice, this isn't the column for you.  Over the course of the last two months, there were week-long stretches when I didn't power up my systems at all, which felt a bit naughty but was empowering nonetheless. I also shifted my perspective from 'down and back,' after trying to shoehorn the world into a broken business model, to 'up and out,' as I look forward with fresh eyes and newfound vigor.

I continue to believe that a massive opportunity exists for financial service firms to embrace the digital landscape; a second-mover advantage, courtesy of the still-sticky regulatory environment. Millennials won't be clicking on banner ads and likely won't have email addresses, as that functionality shifts to the social sphere. If banks and brokers don't digitally pivot in short order, they'll be left out of the daily discourse necessary to build trust with the next generation of investors.

In the financial services world, in terms of reporting lines and budgetary ownership, content and marketing exist in different silos despite the convergences in form and application. This, in my view, is about to dramatically shift as a function of need, internal politics and the status quo notwithstanding.

I've always thought the remaining Minyanville assets would help shape that business solution -- and they still might -- although I understand this business shift will happen with or without me, and timing is everything.

Alas, that's a discussion for another time, so in a nod to habit and with a nostalgic wink, I offer the following Random Thoughts:
  • The more things change, the more they stay the same; and unless you believe that negative interest rates will usher in a new paradigm -- perhaps the two most dangerous words in finance -- it really is only a matter of time before the lines below once again kiss.

  • My brother is a volunteer fireman / paramedic in Baltimore County and what's happening there is F.U.B.A.R to the highest order. And for the record, I am all on equal rights/positive change and extremely supportive of our law enforcement community. These are NOT mutually exclusive views.
  • Since Y2K, the average Manhattan condo price per square foot is +208% vs. 58% in the S&P 500.
  • I attended the Benzinga Fintech Awards a few weeks back and my top-line takeaway was that packaging and selling data is the new packaging and selling of content. Lots of newfangled business models are tied to that thesis. Some will work and others not so much, but either way, the supply side of the equation is building
  • "Caught on video" seems to be the new reality television, which would seemingly help my Kardashian short.
  • Grateful Dead Reunion floor tickets are trading at $116,000. But there's no froth...
  • On April 27, cats and dogs were (literally) sleeping together; that is until Crash awoke and punched our puppy in the eye. A mere coincidence that this occurred the same day as the S&P ticked at all-time highs? Or was it a sign of peak confidence? You be the judge.

And finally, a wise fellow who used to frequent these pages (but wishes to remain anonymous) shared the following thoughts with me.  Please take them for what it's worth, which is one smart man's humble opinion:

Government officials are allowed to lie to the public; something about Plato and the good of the Republic.

Central bankers are not, thus the common trait among them of obfuscation and rhetoric. In the last FOMC minutes, they either lied about consumer sentiment or they can't think straight; maybe both. They are also unable to predict things very well and are wrong much more than they are right; clouded thinking derived from their own academic hubris. Their analysis is more selective than stochastic and now the Prince of them all is advising PIMCO.

Good luck with that.

We have negative nominal interest rates in Switzerland and capitalism doesn't work at zero or negative interest rates. The price of money is nothing or worse? Think about that. When the masses can no longer save to invest, capital formation stops and everyone runs for the stock market. They borrow money to buy stocks in what has become the greatest carry trade ever. Margin debt is untenable.

And our central bankers convince the masses that this is perfectly legitimate.

Consumer sentiment is now saying it's not and something is very wrong. Pension funds are solvent because they insist they can earn 8% on their assets in a 0% world; if they were realistic, they would all be underfunded. What happens when they go to sell the stocks that they have piled into, pretending they can pay for their liabilities? Who is going to buy from this mass exodus?

The four men in a room who manipulate the stock market think they can. Heck, they buy every day smoothing out the increasingly fleeting corrections, keeping the ball rolling and the rich socialists happy. Socialism locks in the wealth of the already wealthy and stifles the nasty competition they don't want. The four men have infinite capital to do this, or so they think. When the real selling comes knocking, they, and the rest of us, will find out they don't.

Until then they just keep on keeping on. They have directives so it's not their fault. Their directors have directives, so no one can be faulted. It continues high up in the political food chain.

The public ignores this when things are going well. People are inductive, not deductive, preferring empirical evidence before they change their minds. But markets, though non-linear, are ultimately deterministic so the rub will come. Then they will have new empirical evidence supporting the old empirical evidence they have already forgotten.

Central banks have fostered $50 trillion more in global debt since the last debt collapse, amassed at much lower interest rates, and most of it is government debt ,which has zero productivity.

That's economic socialism and it is sowing the seeds to destroy the last vestiges of capitalism.


Twitter: @todd_harrison
No positions in stocks mentioned.

Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at

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